Business Function Modeling Ebook Extract

IMMTM
INTEGRATED
MODELLING
METHOD
Function Modelling
John Owens
The development of
IMM™has brought A business mo del l ing method for
Business Modelling into pr ofessi on al ana l ysts and business
the 21st Century per sonnel a l i ke.
Copyright © John Owens 2009

All Rights Reserved
Copyright © John Owens 2009
No part of this document may be reproduced, photocopied, stored
for retrieval by electronic means or made available to
(or transferred to) any third party without the express written
permission of the author
Trademarks
The term IMM™ and the IMM™ Logo are both registered
trademarks.
Copyright © 2009
CONTENTS
1 INTRODUCTION 1
1.1 IMM 1
1.2 Elements of IMM 1
1.3 First Things First 2
2 WHAT IS A BUSINESS MODEL? 3
2.1 Sketch or Model? 3
2.2 Which Model? 3
3 DEFINITIONS 4
3.1 What is a Function? 4
3.2 Misuse of the Term Function 4
3.3 What is Function Modelling? 5
4 THE STAGES OF FUNCTION MODELLING 6
4.1 Information Gathering 6
4.2 Analysis and Investigation 8
4.3 Modelling 8
4.4 Feedback 8
4.5 Implementation 8
5 IDENTIFYING FUNCTIONS 8
5.1 Technique 8
5.2 First Step 8
5.3 Example 8
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IMM © Jo hn Owe ns All Ri ght s Reser ved Index Page 1
6 MECHANISMS 8
6.1 Technique 8
6.2 Examples of Mechanisms for Functions 8
6.3 Exercise 1 8
7 NAMING FUNCTIONS 8
7.1 Suitable Verbs 8
7.2 Nouns in Function Names 8
8 CREATING FUNCTIONS 8
8.1 Worked Example 8
8.2 Removing Duplicates 8
8.3 Exercise 2 8
9 ADDITIONAL FUNCTIONS 8
9.1 Example 8
9.2 Exercise 3 8
10 FUNCTION CATALOGUE 8
10.1 Simple Function Hierarchy 9
10.2 Hierarchy Definitions 10
10.3 Hierarchy Layout 11
10.4 The Standard Business Life Cycle 12
10.5 Function Hierarchy Based On SBLC 13
10.6 What order should the Functions be in? 13
10.7 Grouping Functions 13
10.8 Naming Grouping Functions 13
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10.9 Building the Function Catalogue using Grouping
Functions 13
10.10 How Many Levels in a Hierarchy? 13
10.11 Tuning the Function Catalogue 13
10.12 More on the SBLC 13
10.13 Function Catalogue and Scope 13
10.14 Function Catalogue and Planning 13
11 ELEMENTARY FUNCTIONS 13
11.1 Atomic or Elementary 13
11.2 Example of Elementary Function 13
12 COMMON FUNCTIONS 13
13 FUNCTION CATALOGUE BASED ON ORGANISATION

STRUCTURE 13
14 DEFINING FUNCTIONS 13
14.1 Function Objective 13
14.2 Function Description 13
14.3 Frequency and ‘Growth’ 13
14.4 Data Usage 13
14.5 Fixed Mechanisms 13
14.6 Business Units, Locations, Job Roles 13
14.7 Technology 13
14.8 Function Logic 13
14.9 Business Rules 13
15 MODELS BASED ON THE FUNCTION CATALOGUE 13
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16 SOLUTIONS TO EXERCISES 13
16.1 Solution to Exercise 1 13
17 GLOSSARY 13
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IMM – INTEGRATED MODELLING METHOD FUNCTION MODELLING
1 INTRODUCTION
Welcome to this book on Function Modelling. Function modelling is the
foundation of the Integrated Modelling Method (IMM™) and, indeed, of all
good business modelling.
1.1 IMM
The Integrated Modelling Method is an approach to business modelling, that
I have developed over many years, as a means of empowering analysts and
business managers alike to develop models that bring real business
benefits. The method brings together the best practices in business
systems modelling across a whole range of practical techniques. The
purpose of IMM™ is to enable elegant, accurate, integrated models to be
produced for all or part of a business quickly with accuracy and rigour and,
at the same time, avoid the shortcomings and pitfalls of conventional
modelling methods.
1.2 ELEME NTS OF I MM

IMM™ provides you with a full suite of totally integrated modelling
techniques, each of which is designed to maximise accuracy, effectiveness
and productivity when modelling a particular aspect of a business. The full
suite comprises the elements:
Function Modelling At the heart of IMM™ is the Function

Catalogue, which is built using Function
modelling, the subject covered in this book.
The Function Catalogue is a unique description
of the activities that a business must perform in
order to meet its objectives and continue in
existence. These activities are formally called
Functions but commonly just “Functions”, the
term we will use throughout this book. All
other business models are based on the
Function Catalogue.
Process Modelling This is the technique to use when you need to
model the precise order in which Functions
need to be carried out in response to some
triggering event in order to arrive at a
predefined outcome. For example, “what steps
must we take in order to sell a product to a
new customer and issue their first bill?”
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IMM © John Owens All Rights Reserved 2009 Page 1
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Data Structure This is the technique to use in order to identify

Modelling and model the data needed to support the
Functions and the way in which the elements
of data are related to each other and used by
the Functions. This is an essential exercise
to carry out before building any computer
system – no matter how big or small.
Data Flow Modelling This is the technique to use when you need to
model how information flows into, out of and
around the business.
Procedure Modelling This is the technique to use when you want to
model how business processes ought to be
implemented on a day-to-day business.
Data State Modelling Some data objects can exist in many states.
This technique allows you to model these data
objects and identify the Functions needed to
move them from one state to the next. For
example how to change be a theatre booking
from “provisional” to “confirmed” to
“transferred” to “cancelled” or “collected”.
Matrix Modelling This technique allows you to model how
business objects are related to each other, for
example, Functions to business units,
Functions to data objects, Functions to
technology, etc.
Because each of the models in IMM™ is built using elements from the
Function Catalogue, all of the models are fully interrelated, which provides a
richness, rigour and consistency not offered by any other modelling method.
1.3 FI RST THI NGS FI RST

The starting point for all modelling in IMM™ is the Function Catalogue as it
acts as the unique catalogue of Functions that will be used in all other
models. Does this mean that you have to model all of your business and
build the Function catalogue in its entirety before you can start any other
models? The answer is no!
Although the Function Catalogue lies at the core of IMM™, it does not have
to be created in its entirety in advance of all other models. The more you
can do on the Function Catalogue prior to starting other modelling the easier
your task will be.
But the “I” in IMM™ can be thought of as standing for “Integrated” and
“Interactive”. Whatever facet of IMM™ you are using you will always be
interacting with the Function Catalogue. This interaction will not be limited
simply to using Functions from the catalogue in your models but also adding
to and modifying it.
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2 WHAT IS A BUSINES S MODEL?

A business model is a means of representing some facet of a business in a
way that allows that facet to be better understood, altered or improved.
There are two major parts to any business model:
1) a diagram that pictorially represents the facet of the

business
2) textual descriptions of each of the elements on the

diagram.
Both of these parts must exist for the model to be complete. A diagram on
its own is not a model!
2.1 SKE TCH OR MO DEL?

Can a sketch be used as a diagram in a model? The only diagrams that can
be used as a part of a formal model are those that use standard
conventions and follow rigorous standards. Sketch diagrams by their
nature do neither of these and so cannot be used.
STAND ARD CONVEN TION S

The term “convention” here means “a way of representing an object on the
diagram”. So a “standard convention” simply means objects will be
represented on diagrams in a consistent manner. For example, a step in a
business process will not appear as a circle in one place, as a triangle in
another place and as a fluffy cloud in yet another!
RIGOROU S STANDAR DS
Rigour is vital in modelling. In its simplest form it means “always employ the
standard conventions”, but over and above that, it means to do so in a
manner that is always the same. Standards will also tell you those things
that can appear on a model and those that can not.
2.2 WHI CH MO DEL?

Any model can only represent a part of the item it is trying to model. If we
were trying to model the human body we would need to ask “what facet of
the body are we trying to represent?” and then chose the most appropriate
modelling technique. If we were trying to model the bone structure then
using an x-ray would be a suitable technique, but if we were trying to model
the nervous system it would be less suitable.
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Similarly, in business modelling we must ask the question “what facet of the
business are we trying to represent?” and then choose the most appropriate
modelling technique for that facet. Using the wrong technique can give quite
the wrong results, for example, using Information Flow Diagrams to map
Business Processes. This is a mistake that has often been made in the past
with dire commercial results for the businesses concerned.
IMM™ provides modelling techniques for all facets of a business and, over
and above this, enables all of the techniques to be integrated through the
Function Catalogue.
3 DEFINITIONS
This section will define all of the terms you will need to know in order to
identify and model Functions and successfully build the Function Catalogue.
The Glossary in Section 0 contains definitions that cover all of the IMM™
modelling methods. It also has definitions for business analysis in general
and some elementary systems design.
3.1 WHA T I S A FUNCTIO N?

A Function – more commonly called a Function – is a discrete activity or a
coherent set of activities that a business must perform in order to meet its
business objectives and continue in existence. Functions are what the
business ought to be doing.
Examples of Functions are:
• Sell Product to Customer
• Maintain Stock of Material for Manufacture of Product
• Charge Customer for Product Supplied
• Recruit Employees
• Collect Payment from Customer
3.2 MI SUSE O F THE TE RM F UNCTI O N

The term “Function” is often incorrectly used to mean an organisation unit
within a business. People will refer to the “Finance Function” when they
really mean the “Finance Department”. This misuse of the term should be
avoided. The term “Finance Function” is only a valid term if it is used to
mean “all of the finance activities required to support the business”.
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3.3 WH A T I S FUNCTI O N MO DEL LI NG?

Function modelling is all about identifying, analysing and modelling
Functions, independently of:
• how they are currently done

• who currently does them.
• the current organisation structure
“ WHAT ” N O T “ HO W ” !
The real power of Function Modelling is realised by concentrating on what
the business ought to be doing as opposed to how things are currently
done.
The main reason for this is that how things are done in a business can
change dramatically over time (due to changes in such things as policy,
technology, etc.) whereas what has to be done, by and large, remains the
same.
An example of this might be in the hotel industry where “Establish Client

Creditworthiness” is a “what” that would have needed to be done 50 years
ago and still needs to be done.
But, the how it was done then and now are entirely different:
The how of 50 Years Ago The How of Now

Has client got a title, e.g. Lord or Swipe the client’s credit card. If
Sir? If so, accept reservation. If accepted proceed with booking, if
not, does the client’s dress and not reject.
luggage suggest he has money? If
yes accept reservation, if not
decline.
“ OUGHT ” NO T “ DOE S ”
It is also a common misconception that you need to model all the things that
a business currently does in order to know what the business ought to be
doing.
On the contrary, how a business currently operates is often as far from

where the business needs to be as one could get! Many months (in large
organisations, years) can be wasted in doing this. This approach also
introduces many layers of unwanted complexity due to modelling current
Mechanisms and procedures (how things are currently done) as opposed to
what ought to be done.
Always go straight to modelling what the business ought to be doing,

this will enable the business to go straight there too!
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4 THE STAGES OF FUNCTI ON

MODELLING
So let’s start with the five distinct stages of Function Modelling:
• Information gathering
• Analysis and investigation
• Modelling
• Feedback
• Implementation
All of these stages are detailed in the following subsections and should be
followed whether you are doing modelling in an organisation with 5
employees 5,000 employees or 25,000 employees.
If you are doing work in a small organisation you might think that it all seems
too much! But it is not. All of the stages described should be thought of as
stages of thinking that you need go through during business modelling.
They do not need to take a great deal of time.
If you go through these stages (in the right order and skipping none!) you will
always achieve quality results and get the right answer first time, every
time!
I have tested IMM™ in all sizes of organisation from 5 to 30, 000 and it
works – every time!
4.1 INFO RMA TIO N GA THE RIN G

This stage consists of finding identifying the key people or other sources
within the business that can tell you:
• What the business OUGHT to be doing.
• The order in which it ought to be done.
• The information required to do it.
• What the business modelling project ought to achieve.
• Whether or not they support the project.
• Who else you ought to be interviewing.
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Information gathering can be done in three main ways:
1) Using existing documents.
2) Running strategic interviews.
3) Running modelling workshops.
These methods are not mutually exclusive! In a well run business modelling
project each of them will be used as appropriate.
EXISTIN G DOCU MEN TS

In order to avoid unnecessarily repeating the work previously done by other
analysts or business managers the first thing you should do is to identify all
relevant existing documents that will help you to build up a meaningful
“picture” of the business before you go into one-to-one strategic interviews
(see below). Such documents would include:
• Business strategy document for the business as a whole or for that part
of the business being modelled.
• Previous analysis documents produced by business managers or by

the Information Systems departments as part of previous systems
development.
• Strategy documents produced by outside consultants as part of recent

work.
The main reason for using existing documentation is to avoid wasting the
time of busy people during one-to-one interviews; they are not to be used
instead of one-to-one interviews. They allow you to go to the interview
properly prepared.
Using existing documents can be fraught with danger for many reasons:
• The documents can be out of date, with little relevance to what the
business ought to be doing now and in the future.
• They can be vague. Strategy documents are all too often written in
vague “mission statement” terms with the real business strategy locked
in the heads of directors and senior executives.
• Documents written by outside consultants can be also be vague and

written in such a manner that, without having the consultant who wrote
the document present to explain what they mean, could be open to
several interpretations.
• Analysis documents produced by the Information Systems / Computing

Department are all too often written in jargon or in terms of perceived
or existing system solutions as opposed to meaningful business terms.
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So, before getting too embroiled in existing documents, you should evaluate
their quality and, if they pass evaluation, use them to prepare for one-to-one
interviews.
You must also make sure that the documents and models that you
produce during this business modelling project do not end up joining
the rest of the unused and unusable documents produced up until
now.
Using the elements of IMM™ in the way that we recommend, plus your
skills as an analyst and some common sense will ensure that the
likelihood of that happening is very, very low!
ONE TO ONE IN TERVIE W S

The one-to-one strategic in-depth interview is the most effective means of
gathering information from senior directors and senior executives.
The purpose of these interviews is to find out from these key people what
their opinions are regarding the business area in question and the project
itself.
Such interviews will give you a feel for, provided you listen to what is said
(sometimes what is unsaid), what is most important to the interviewee and,
as he or she is a key member of the business, it is vital that you know this
before proceeding with the project. This is the type of information that you
cannot gather from documents alone. All of the knowledge you gather here
will help you to formulate a forward strategy for the business modelling
project.
Who To Interview
Effective strategic interviews with appropriate senior executives are the

essence of the success of any business modelling project. The term
“appropriate” means that the person:
• Is knowledgeable about the business area in question.
• Is a key player in that area.
• Is empowered to define and implement strategy for that area.
• Has a vision of the way forward.
• Supports the objectives of the business modelling project
<Break in extract>
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10 FUNCTION CATALOGUE
In Section 4.1 we covered the information gathering stage of Function
Modelling. In Sections , and we covered the Analysis Stage of
business modelling. Now we come to the modelling stage itself.
In a project of any size, by the end of the analysis stage we will have built up
a long Consolidated Function List. Such a large list is not easy to work with
and does not readily make apparent the nature and “shape” of the business
being modelled.
A simple, yet powerful means of modelling such a list is to give it an

hierarchical structure. In IMM™ we call Functions in hierarchical form the
Function Catalogue.
This is a very powerful model in its own right but is also the foundation for all
other models in IMM™.
10.1 SI MPLE FUNCTIO N HIE R A RCH Y
Sell Books to the

General Public
Determine Which Order Books from Receive Books Sell Books

Books to Order Publishers from the
Publishers
The above hierarchy tells us that selling books to the general public
comprises four activities:
• Determining which books to order
• Ordering books from publishers
• Receiving books from publishers
• Selling the books
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10.2 HIERA RCH Y DE FI NI TIO N S

Below is a diagram defining various terms used with regard to Function
hierarchies.
Root This is the Function at (paradoxically) the top of the

Function hierarchy. It got this name because people saw
hierarchies as “upside-down” trees.
Atomic These are the Functions at the bottom of the hierarchy.
Function They have no other Functions hanging below them.
Grouping This is a Function in the middle of the hierarchy with
Function Functions both above and below it. The use of Grouping
Functions is described in more detail in Section 0.
Parent This is a Function with Functions beneath it. It is seen as
Function the parent of the Functions beneath it; they are its
“children”.
Child Functions below a Grouping Function are sometimes
Function called Child Functions; the Grouping Function being their
“parent”. Every Function, apart from the root Function, is
a Child Function.
Leaf Function This is another name for an “Atomic Function”.
Elementary This is a very special type of Function described in detail
Function in Section 0. The term “Atomic” or “Leaf” is often
incorrectly used for Elementary Function.
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10.3 HIERA RCH Y L AYOUT

There are three basic ways in which a Function Catalogue can be arranged:
Vertical layout, Horizontal layout or Hybrid layout.
Sell Books to the

General Public
VERTICAL L AYOU T
Vertical layout is where the Child Functions are Determine Which
hung under each other vertically. An example of Books to Order
a small vertical layout is shown on the right. This

layout is sometimes acceptable for small Order Books from
Publishers
hierarchies or for parts of a larger hierarchy but is
generally unworkable on a hierarchy of any
significant size. Receive Books
from the
Publishers
Sell Books
HORIZON TAL L AY OU T
The Function hierarchy shown below has a “horizontal” layout. This is
where the Child Functions on each level of the hierarchy are positioned
alongside each other. Once again, this is fine for small hierarchies but not
as good for large ones as they quickly become very wide and unwieldy.
Sell Books to the

General Public
Determine Which Order Books from Receive Books Sell Books

Books to Order Publishers from the
Publishers
Scan Best Selling Scan Best Selling Establish Family Accept Delivery of Stock Shelves with
List by Author List by Title Favourites Books Books
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Sell Books to the

General Public
HY BRID
LAYOU T Determine Which
Books to Order
Order Books from
Publishers
Receive Books
from the
Sell Books
Publishers
A better layout for
hierarchies, and the
Scan Best Selling Accept Delivery of
standard in IMM™, is the List by Author Books
“hybrid” layout. It is a
combination of vertical and Scan Best Selling Stock Shelves with
horizontal layouts and is List by Title Books
shown on the right.

Establish Family
Favourites
In the Hybrid Layout, if the Functions on a leg of a hierarchy have no Child

Functions then they are drawn vertically, one under the other. If any of the
Functions have children then the leg is drawn horizontally, with the Child
Functions drawn vertically below – as long as they do not have children,
otherwise they are drawn horizontally, and so on.
10.4 THE STA NDA RD BUSI NE S S LI FE CYCLE

The Standard Business Life Cycle (SBLC) says that in order to operate
properly, effectively and efficiently a business should first plan what it is
going to do. It must then perform what it has planned. Finally, it must
monitor what it has done against the plan, re-planning if necessary to take
account of variances from the plan. So all Functions in a business can be
grouped under the headings of:
Plan Define what needs to be done, when it needs to be done,

how it ought to be done and the resources needed to do.
Perform Do what was planned using the defined resources and the
method prescribed by the plan.
Monitor Check that what was done is what was planned and if not
take appropriate action.
This represents the Standard Business Life Cycle, which can be drawn as
in the diagram below.
PLAN PERFORM
MONITOR
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10.5 FUNCTI O N HIE RA RCH Y B A SE D O N SBL C

The Standard Business Life Cycle is a powerful starting point for building a
Function Catalogue.
Manufacture Parts
for the Motor
Industry
Plan the Perform the Monitor the

Manufacture of Manufacture of Manufacture of
Parts Parts Parts
The “root” Function, the one at the very top of the hierarchy, will be a short,
succinct statement of the overall business objective for the business area.
Immediately under that will come Plan, Perform and Monitor from the
Standard Business Life Cycle as shown below.
The rest of the hierarchy is built by adding the Functions from the
Consolidated Function List to this hierarchy. Those Functions that are
“planning” in nature go under the “Plan” leg. Those that are “monitoring” or
“analysis” in nature go under the “Monitor” leg. Those that are not
“planning”, “monitoring” or “analysis”, i.e. are “doing” Functions go under the
“Perform” leg.
After all the Functions have been added to the hierarchy, full descriptions
(see Section 0) should be given to the Atomic Functions, i.e. those
Functions at the bottom of the hierarchy that have no “Child” Functions
beneath them.
10.6 WHA T O RDER SHO UL D THE FUNCTIO NS

BE I N?
The order in which Functions are listed on a Function Catalogue is the order
in which one would normally expect them to be executed under normal
circumstances.
However, some of the Functions on the Function Catalogue may not be
performed all of the time and, even if they are, they may not always be
performed in the same order.
If it is important to know and model the precise order in which Functions are
executed under particular conditions then you will need to build a Process
Model.
How to do this is described in details in my book
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IMM Process Modelling available from our on-line store at
www.integratedmodelling.co.nz
TM

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1.2 Elements of IMM 1

1.3 First Things First 2

2 WHAT IS A BUSINESS MODEL? 3

2.1 Sketch or Model? 3

2.2 Which Model? 3

3.1 What is a Function? 4

3.2 Misuse of the Term Function 4

3.3 What is Function Modelling? 5

4 THE STAGES OF FUNCTION MODELLING 6

4.1 Information Gathering 6

4.2 Analysis and Investigation 8

5.2 First Step 8

6.2 Examples of Mechanisms for Functions 8

7.1 Suitable Verbs 8

7.2 Nouns in Function Names 8

8.1 Worked Example 8

8.2 Removing Duplicates 8

10.1 Simple Function Hierarchy 9

10.2 Hierarchy Definitions 10

10.3 Hierarchy Layout 11

10.4 The Standard Business Life Cycle 12

10.5 Function Hierarchy Based On SBLC 13

10.6 What order should the Functions be in? 13

10.7 Grouping Functions 13

10.8 Naming Grouping Functions 13

10.10 How Many Levels in a Hierarchy? 13

10.11 Tuning the Function Catalogue 13

10.12 More on the SBLC 13

10.13 Function Catalogue and Scope 13

10.14 Function Catalogue and Planning 13

11.1 Atomic or Elementary 13

11.2 Example of Elementary Function 13

13 FUNCTION CATALOGUE BASED ON ORGANISATION

14.1 Function Objective 13

14.2 Function Description 13

14.3 Frequency and ‘Growth’ 13

14.4 Data Usage 13

14.5 Fixed Mechanisms 13

14.6 Business Units, Locations, Job Roles 13

14.8 Function Logic 13

14.9 Business Rules 13

15 MODELS BASED ON THE FUNCTION CATALOGUE 13

16.1 Solution to Exercise 1 13

16.2 Solution to Exercise 2 13

16.3 Solution to Exercise 3 13

16.4 Solution to Exercise 4 13

16.5 Solution to Exercise 5 13

1.2 ELEME NTS OF I MM

Function Modelling At the heart of IMM™ is the Function

Data Structure This is the technique to use in order to identify

1.3 FI RST THI NGS FI RST

2 WHAT IS A BUSINES S MODEL?

There are two major parts to any business model:

1) a diagram that pictorially represents the facet of the

2) textual descriptions of each of the elements on the

2.1 SKE TCH OR MO DEL?

STAND ARD CONVEN TION S

2.2 WHI CH MO DEL?

3.1 WHA T I S A FUNCTIO N?

Examples of Functions are:

• Sell Product to Customer